What is first right of refusal?

When creating a lease or contract in the Texas oil industry, it is essential that you understand all the complexities of the situation. If you happen to be leasing a very lucrative property or an area that is has captured the interest of others, you not only have to worry about competition in getting your lease but also competition after you secure the contract. This is where the first right of refusal comes in. According to Mineral Wise, the first right of refusal is an agreement that you will get the chance to top lease before anyone else. A top lease is when someone secures a contract while another lease is in effect. This new lease goes into effect immediately upon the end of the first lease. Top leasing is very common with properties that are in high demand. This can often happen when you work in areas rich in resources. Everyone wants a chance to get their piece of the pie. When you include a provision in your lease that gives you the first right of refusal, you ensure that once your contract ends, you can renew it and not have to wait in line behind whoever secures the top lease. It is essential to be aware, though, that having the top lease does not always mean you will get a return. If resources run out during your initial rental, you still have to honor the top lease terms, so there is a chance you could lose out. However, if you feel this is a very lucrative property, it is better to include the provision for the first right of refusal than to risk missing out. This information is for education and is not legal advice.